The New World Economy

The world economy is in the midst of dramatic changes, driven largely by technology. Automation is replacing industrial workers, and now computer technology is starting to replace many office workers.

This will have a dramatic impact on the world and the American economy, and on the lives and opportunities of many Americans.

Politicians argue about debt limits and tax rates, but those will only have a small impact on the economy. The real impact is technology.

The Associate Press is running a series of articles on the impact of technology on the world’s economy. A link can be found here: Recession, Tech Kill Middle-Class Jobs.

The link is to a Windstream news feed and I can’t guarantee its usefulness.

Here are three key quotes that neatly sum up the report:

  • For more than three decades, technology has reduced the number of jobs in manufacturing. Robots and other machines controlled by computer programs work faster and make fewer mistakes than humans. Now, that same efficiency is being unleashed in the service economy, which employs more than two-thirds of the workforce in developed countries. Technology is eliminating jobs in office buildings, retail establishments and other businesses consumers deal with every day.
  •  Thanks to technology, companies in the Standard & Poor’s 500 stock index reported one-third more profit the past year than they earned the year before the Great Recession. They’ve also expanded their businesses, but total employment, at 21.1 million, has declined by a half-million.
  • Technology is replacing workers in developed countries regardless of their politics, policies and laws. Union rules and labor laws may slow the dismissal of employees, but no country is attempting to prohibit organizations from using technology that allows them to operate more efficiently — and with fewer employees.

Notes on the Gun Control Debate

Listening to the debate over gun rights and proposals to regulate guns, I’ve noticed three fairly glaring errors of logic in the arguments of the opponents of gun control.

1.    The Second Amendment is Inviolable.

Proponents of gun rights suggest that the right to bear arms under the Second Amendment is absolute and cannot be limited. But every constitutional right is subject to some manner of reasonable restriction. Probably the closest example is the First Amendment right to freedom of speech.

The Constitution says “Congress shall make no law … abridging the freedom of speech, or of the press.”

Despite this blanket and absolute ban (“make no law”) there are numerous restrictions of the ability to say, write, or publish things. There are laws against obscenity; there are laws against defamation (slander and libel); there are copyright laws that limit one person’s ability to use or incorporate another person’s words or expression; there are a wide variety of time, place and manner restrictions (can’t amplify sound after a certain time, must obtain parade and rally permits, etc. etc.); and there are restrictions on words as action (“fighting words”, yelling “fire” in a crowded theater, claiming “free speech” as a defense against charges of conspiracy.)

The courts have long recognized that there must be reasonable restrictions on every right. In fact the Fourth Amendment right against unreasonable search and seizure is now a Swiss cheese of restrictions around a few holes of rights. And the Supreme Court, in Heller (District of Columbia v. Heller, 554 U.S. 570 (2008), the case that said that the Second Amendment conferred an individual right to bear arms) said that there can be reasonable restrictions on gun rights.

2.    The Slippery Slope.

Yes, the proponents of gun rights say, there can be “reasonable restrictions,” but the reality is that if we start with “reasonable” restrictions we will never stop, and eventually—and inevitably—we will have the confiscation of all guns. This is the slippery slope argument. But how valid is it.

Again we can use the First Amendment as an example of the fallacy of this argument. Over the course of two hundred years of American history, there have been many different restrictions on the right of free speech, but there has never been a serious attempt to abolish it completely.

Within a few years of the adoption of the Bill of Rights, the Federalists under President John Adams pushed the Sedition Act through Congress. The Sedition Act made it a crime to criticize the President or the government. (It was passed against the back-drop of the French Revolution and legitimate concerns that French agent-provocateurs might foment instability in America, and was paired with the Alien Act, but most contemporaries thought foreign dangers were widely overblown.) The Sedition Act clearly violates the First Amendment, and Adams’ political opponents (Thomas Jefferson and James Madison, and the Democratic-Republican Party) howled in outrage. Under this law, newspapers were shut down, and editors were prosecuted and imprisoned. Even many Federalists were shocked by this blatant power grab, and it contributed to the election of Thomas Jefferson in 1800, and the demise of the Federalist Party.

Throughout our history, particularly during periods of concern over foreign turmoil, the government has cracked down on speech in a manner clearly in violation of the First Amendment. There have been a number of variations of sedition laws, restrictions on certain forms of speech, and loyalty oaths that clearly punish people for opinions that should be protected under the First Amendment. Despite this, there has never been a serious attempt to allow government censorship. There has always been an ebb and flow, and now we have one of the freest and open societies in the world.

In other words, despite the fact that those wanting to restrict certain speech have succeeded, we have never started down the slippery slope to total government censorship. And despite previous restrictions we now have an extremely open version of free speech. Did you know that nude dancing and pornographic depictions of people engaging in sexual activity is protected as free speech?

If anything, despite the attempts by some to restrict free speech, we have not gone down the slippery slope, we have actually gone the other way. So why would the slippery slope work differently for the Second Amendment than it has for the First?

3.    The “Real Motive” is the total elimination of the private ownership of guns.

OK, gun right supporters say, perhaps it hasn’t happened with the First Amendment. But, some argue, the reality is that those who are now pushing for what they call “reasonable” restrictions, really want a total ban on private gun ownership.

This is an argument I’ve always enjoyed. I find it fascinating that some people think that they can read other people’s minds, see into their heart, and deduce their motives. Some people believe that despite what other people say, they know what they really mean.

There are any number of problems with this argument.

The first, and most obvious, is that it is silly. Really, conservatives? You really believe you can read minds? You really believe that you know what is in other people’s heart and soul?

A second problem is that it implies bad faith. It implies that those who say they want “reasonable” restrictions are liars, and are willing to engage in deception to get their way. Once you accuse your opponent of being deceitful, you poison the well, which makes it difficult to have an honest debate on any issue. And accusing your opponent of bad faith leaves you open to challenges of bad faith, which leads to a downward spiral. Sound familiar?

A third problem is that it imposes the views of a radical minority on the majority. There are certainly some people who support a total ban on all private ownership of guns, but it’s a tiny minority. Conservatives howl when liberals imply that every member of the Tea Party is a racist simply because a few kooks carry racist posters at a rally. The crazies, they say, don’t represent the majority. The same holds true for liberal groups and ideas.

A fourth problem is that it is, more often than not, wrong. We can look at the ebb and flow of the restrictions on the First Amendment to see that. Even those who restricted some forms of speech never attempted to eliminate all forms of speech.

We have also had, throughout our history, different levels of gun control, and there has never been a serious attempt at a total ban. During the 1920’s and the rise of the American Gangster, Congress passed a number of gun restrictions (with the support and endorsement of the NRA, it should be noted). And did they keep going? Nope. During the 1960’s Congress again enacted gun control legislation, in part to limit the ability of black nationalists to carry weapons (and again with NRA support). Were more restrictive gun control measures in the pipeline? Nope.

Bumper Sticker Logic

I saw this on a bumper sticker not long ago:

“The Bigger the Government, the Smaller the Citizen.”

I didn’t get a chance to talk to the driver to find out what he thought it meant, but my presumption is that it in line with the conservative idea of limited government. The more limited the government, the more rights for the citizens; and conversely the larger and more pervasive the government, the fewer rights of the citizens. Hence: the bigger the government, the smaller the citizen.

But let’s think about that in the real world. First, let’s think about those countries with little or no government, places like Somalia or Mali. Where there is no government there is not maximum freedom for the citizens, but chaos.

Second, let’s think about those countries that are rich and have high standards of living.  The United Nations has what they call the Human Development Index, which ranks countries according to a number of factors, including life expectancy, education, and wealth as measured by the gross domestic product per capital. (This is published annually in the UN Human Development Report.) [http://hdr.undp.org/en/reports/]

The list for 2011 is here. 

The top five countries are Norway, Australia, Netherlands, US, and New Zealand. All of the top countries are nations with modern regulatory governments with strong social welfare programs. If you go to the bottom of the report you will notice that all of the counties at the bottom, which the UN says are nations with “Low Human Development”, are countries with minimal or failing governments, like Afghanistan and Sierra Leone.

But overall wealth and a high standard of living doesn’t necessarily equate to “liberty” and “freedom.” Perhaps the people of Mali are more free than the citizens of Norway.

Of course one argument is that the people of Mali live in endemic poverty, and so even if they are less burdened by the heavy hand of government, they don’t have the financial wherewithal to exercise those freedoms.

So let’s look at the other side, and consider Norway. Norway is a near socialistic state, with universal health care, a strong welfare system, and a high degree of government regulation of the economy. So are the citizens of Norway veritable serfs? Actually they seem pretty free to me. They seem able to do almost anything they want. In fact we in the US might consider their society rather licentious.

In fact, if you look at the countries on the top of the list (which includes the US, Canada, Australia, New Zealand, Japan and most of Europe) you see countries with a relatively high degree of government regulation of the economy, and countries with pretty generous welfare programs. And are the citizens of these wealthy nations serfs? In any real sense they are the freest in the world. They have open cultures and successful liberal democracies. They have strong economies (as compared to the rest of the world, even considering the recent world-wide recession) and their citizens are generally fairly wealthy and have a very good standard of living. As a result they have the financial ability to pursue a wide variety of educational and leisure options. They are what is commonly referred to as free.

So if one was to consider the real world, and not the logic of a bumper sticker, one would conclude that the reality is that the smaller the government, the poorer the citizen. And since poverty can stunt your growth: the smaller the government, the smaller the citizen.

Roll Over Mister Burke

Once upon a time conservatism was about social stability, and dead set against making dramatic social or governmental changes based on philosophical theories or the whims of politicians. Edmund Burke, the intellectual father of conservatism, created his ideology after watching the horrors of the French Revolution. He said that social and cultural institutions are the repository of the collected wisdom of humanity, and they shouldn’t be changed lightly. He also said that of all the justifications for change, political theory is among the most dangerous. He saw the disastrous attempts by French revolutionaries to put the political theories of the French philosophers—Rousseau, Diderot, Voltaire, et al—into action. This, he said, was the wrong way to take action that affected the lives of millions of people. Burke didn’t oppose change, but he though it should be gradual, evolutionary, rather than revolutionary. He also didn’t oppose political liberty – he was an early and vociferous advocate of American independence, and a strong supporter of Irish independence—but he didn’t think that the way to achieve political liberty was to overthrowing the existing order and replace it with the untested theories of political philosophers.

In the last few weeks we have had two purely speculative ideas thrust into the political debate. As his presidential campaign was tanking, and as he attempted to dodge questions about how he would balance the budget at the same time as cutting taxes, Mitt Romney said that he would make up the revenue shortfall by limiting deductions for the wealthy. The idea was widely panned by most reputable economists, who laid out mathematically that there was not enough money in those deductions to make up for the other planned cuts. The idea should have died a quick death. But then, as Republicans scrambled for a way to make up the massive revenue shortfalls in their budget proposals to avert the so called fiscal cliff, they grasped Romney’s silly idea, and it became the centerpiece of their plan. Again serious economists said that limiting, or even totally eliminating, deductions for high earners would simply not provide the revenue that Republicans were claiming. But they liked the theory, the untested political idea presented on a political whim, and didn’t want to address the political and economic reality.

And then, in the aftermath of the tragic school shootings in Newtown, Connecticut, the chief spokesman for the NRA suggested that there should be an armed guard at every school in America. Within a few days Republican politicians were parroting this line, and some state politicians were even working on legislation to train teachers or school principles to be able to carry a weapon in school. Never mind that this too was an entirely untested idea splashed into the political debate as a rhetorical point by a partisan hack.

Both are exactly the type of untested theories that Burke warned us against. And both were presented by people who call themselves “conservative.” Burke must be rolling in his grave.

What Cuts?

I’ve spend the last thirty years listening to conservative Republicans talking about the need to cut government spending. That’s been a pretty consistent component of conservative ideology at least since Reagan. But the odd thing is that in all of those thirty years I’ve not heard any specifics. I take that back, I have heard a few specifics. During one of the presidential debates, when questioned about specific government cuts he proposed or supported, Mitt Romney mentioned cutting government funding for the Corporation for Public Broadcasting: i.e. Big Bird. That’s it. Thirty years of talking about it and conservatives generally only specifically mention CPB.

There are a couple of reasons for this. The first is that most government programs have constituencies, and promoting specific cuts ends up creating specific enemies, and specific attack ads during a campaign. So if you suggest that, for example, food stamps should be cut, you risk having those cuts thrown in your face in a political attack ad.

The second reason is that mentioning specific cuts creates identifiable bench marks. If you say, for example, that we should cut subsidies to oil companies, and then those subsidies are never cut, you risk having that thrown in  your face as an example of your failure to live up to your promises.

The third reason, however, is probably the most important. If you describe government as this huge entity that needs to be cut you can always rally against “big government.” But if you break it down into specifics it reminds people that many of those government programs are actually beneficial, and then it becomes difficult to make specific cuts. (See point one.) It also allows opponents of the cuts (also known as supporters of the programs) to the describe the benefits of the programs. So mentioning specific cuts erodes their ability to complain about “big government” and “all that spending.”

But after thirty years it is high time that conservatives provide some specifics. It shouldn’t be too hard to do. Simply go through the various cabinet departments and list what you don’t like. Start at the beginning, The Department of Agriculture, and say what should be cut and should be kept. And work through to Treasury. Any politician who can’t do this probably doesn’t have a clear understanding of what the government does. So their protestations of “all the spending” is little more than a primal scream, and should not be taken very seriously.

Through the Looking Glass

During the debate over the budget deal to avert the so-called fiscal cliff, Republicans suggested changing the calculation for adjusting social security for inflation. (An idea I support, but which is no the subject of this post.) In response, Democratic Senator, and Majority Leader, Harry Reid of Nevada said “we’re not going to talk about cutting social security.”

 This is not an uncommon tactic, to suggest that slowing the rate of growth of a program is actually a “cut.” Now in one way it may be a cut. If, for example, there is a scheduled 10% increase in a program, and a decision is made to reduce the rate of growth to 5%, there is a cut in the rate of growth. But that isn’t the same thing is a cut.

 Here’s an example that most people might be able to understand. Lets say you make $36,0000 a year (or $3000 a month). If your boss comes to you and says that next year your pay will be $35,000, that is a cut. If your boss comes to you and says that your pay will not increase at all, that is not a cut, its just not a raise. If, on the other hand, you are scheduled to get a raise, of, lets say 10% (you had a great year, and darn it, you deserve it), your pay will go up to $39,600. If your boss says that things didn’t work out, and you will only get a raise to $38,000, that is a cut in a promised raise. But if your boss says that business was good, and he might raise your pay 10%, but then it turns out that things did not work out quite as well, and he can only give you a 5% raise, that is a lower raise, but it’s still a raise.

 But what if your  boss says he will raise your pay based on the change in the CPI, the consumer price index, which is one of the government’s indices for calculating inflation. But then he decides that his business did not grow at the rate of inflation as calculate by the CPI, so he will raise your pay based on a different economic calculation of inflation? Is that a pay cut? Not in the real world. It may be a smaller raise than you were expecting, and you may complain bitterly, but it sure isn’t a pay cut.

 Except in Washington. In Washington a lower increase is a cut. And that is one of the problems with Washington. Words have essentially lost all meaning. We have gone through the looking glass into a world where words have lost all meaning. If a slower increase is a cut then what is a real cut?

 If we can’t discuss the problems with face in a fixed language, in a language where words stand for their ordinary meaning, how can we truly understand what the problems are? We can’t. It’s all mush and spin. It’s all a bunch of mealy mouthed nonsense. 

Boehner’s Plan B

The Republican Speaker of the House of Representatives, John Boehner of Ohio tried to make an end run around the President and his proposal for dealing with the so called “fiscal cliff” by asking the House to vote on what Boehner called his “Plan B.” Plan B was basically a bill that would have allowed taxes to go up for taxpayers making over $1 million, and defer discussion of other maters until later. Boehner’s plan was supposed to embarrass the Democrats, since many of them had proposed such a plan earlier in the year. The problem was that he could not muster enough votes in his own Republican caucus. So Boehner walked away, but before he walked away, he announced in a pique:  

 “Now it is up to the president to work with Senator (Harry) Reid on legislation to avert the fiscal cliff.”

 That’s nice, but there’s only one problem with Boehner’s idea, this little gem:

 “All Bills for raising Revenue shall originate in the House of Representatives.”

That’s from the United States Constitution, Article I, Section 7, Clause 1.

It never ceases to amaze me that conservatives claim deep (deep, deep, deep) deference to the Constitution. Many of them carry around pocket versions that they like to wave around to make a point. But when things don’t go there way, they act like they’ve never heard of the Constitution.

Whether Speaker Boehner wants to deal with it or not is simply irrelevant. Its not the dastardly Democrats, or that slippery Obama, or the liberal press corps that is making him deal with the deficit and the budget. It’s the Constitution.

So Boehner can do one of two things. The first is to do his duty under the Constitution, and work out a revenue bill. Or the second is to walk away, but the coda to that option is that he has to stop lecturing us about his deference to, or supposed knowledge of, the Constitution. He simply can’t have it both ways.  

Andy Barr and Community Banking

Newly elected Representative Any Barr was appointed to sit on the House Financial Services Committee. Barr said that “Serving on the Financial Services Committee will enable me to immediately go to work on solving Kentucky’s jobs crisis. … We must return to the day when a local banker and a small businessperson could meet face-to-face and arrange a loan based on trust and accountability.” [Read more here: http://www.kentucky.com/2012/12/13/2442457/andy-barr-gets-seat-on-house-financial.html#storylink=misearch#storylink=cpy]

There are serious concerns about some of the provisions of the Dodd-Frank Reform Bill, particularly provisions that tighten lending requirements. Some have suggested that the lending requirements are too tight, and this is an issue that must be addressed, and hopefully Representative Barr will work on the issue.

But the problems with community banks goes far beyond Dodd-Frank. There has been a dramatic decline in the number of community banks over the recent decade, and the cause is not Washington regulation. The cause is the free market and the fact that large banks are just more efficient than small banks. According to a report from Celent, which is a research firm that advises financial instates, there has been an “unprecedented concentration” in banking, and much of it has come at the expense of community banks. A link to the Report is here: The Decline of the Community Bank.

 If Representative Barr wants to truly address the problems facing community banks, he needs to look at all of the issues facing community banks. That includes over regulation, but it also includes the effects of consolidation. The problem is that consolidation is a product of the operation of the free market, and that means that there are, on occasion, negative effects from the free market. I wonder how Rep. Barr will address that.

The GOP and Human Nature

Rick Perry said recently that he wants to “make abortion, at any stage, a thing of the past.” (He was speaking at a press conference organized by Texas Right to Life on Tuesday December 11, 2012.)

This may seem like an admirable and laudable goal, but the problem is that it does not relate to human nature. Whether we like it or not, abortion has existed since the beginning of time, and has existed in every human culture. Abortion exists because unwanted pregnancies exist. And unwanted pregnancies exist because of the fallibility of human nature. People are the product of their nature, and desire, and a hundred other emotions bundled up with the urge for sex, is a product of human nature.

We can only end abortion if we end unwanted pregnancies, and we will only be able to stop unwanted pregnancies if we are somehow able to change human nature.

I recently read a quote from Abraham Lincoln on drinking. Lincoln was addressing the Illinois Temperance Society when he said that to think that criminalizing alcohol would stop drinking and drunkenness is “to expect a reversal of human nature, which is God’s decree and never can be reversed.” [From Raiding Consciousness: Why the War on Drugs is a War on Human Nature, by Lewis Lapham, published in the Winter 2012 issue of Lapham’s Quarterly, and on-line at TomDispatch:  http://www.tomdispatch.com/blog/175626/tomgram%3A_lewis_lapham%2C_drugs_and_the_national_security_state

I am neither praising nor defending abortion, just suggesting that we need to address it as a product of the human condition.